The myth of the spoiled, entitled millennial is one that Beth Kobliner would like to dispel.
A former staff writer for Money magazine who has just released an updated edition of her best-selling book Get a Financial Life: Personal Finance in Your Twenties and Thirties, Kobliner says millennials have gotten a bum rap. Far from being spoiled and entitled, she says, they’re more like the hardworking, conscientious and thrifty generation that came of age in the Great Depression and went on to fight in World War Il.
“This generation has been under the gun – it’s not been smooth sailing for them,” she says. Today’s twenty and thirty-somethings came of age in the wake of the worst economic crisis since the Great Depression, she notes. They owe record levels of student loan debt, the job market is rough and a full 45 percent of millennials are working gig economy jobs that offer no health benefits, pensions or 401(k)s. On top of that, they face ridiculously high rents (think $3000 for a shared room in NYC and San Francisco), tight mortgage restrictions and stagnating wages.
Like their Depression-era predecessors, millennials have often had to take on two or more jobs to go to school and make ends meet. And like their predecessors that news anchor Tom Brokaw dubbed The Greatest Generation, they are extremely wary of falling into debt.
In many ways, millennials are more similar to the Depression generation than they are to boomers and Gen Xers, according to Kobliner. “Although separated by 87 years, the Great Depression and the Great Recession generations both went through major economic upheavals that were not of their own making, in which millions of people lost their homes and had to dig themselves out of debt. Many millennials have seen what happened to parents; they’ve seen what can happen with adjustable mortgages when you can’t make the spiraling monthly payments…No wonder they are cautious.”
And when it comes to personal finance, it might surprise some commentators that millennials are outpacing their predecessors.
“The millennial generation is amazing – they’re carrying more student loan debt than any generation in history, but they have less credit card debt than Gen Xers or baby boomers,” says Kobliner, who has served on the President’s Advisory Council on Financial Capability for Young Americans and has contributed to the New York Times and Wall Street Journal. “Some don’t want to use credit cards at all, and many are very careful not to carry debt on their cards – they just use them for convenience.”
Millennials are also better at saving and planning for the future. “In some polls I’ve seen, millennials are better at saving for retirement,” says Kobliner. “The median age millennials open a 401(k) is at 22, compared to age 28 for Gen-Xers and 35 for baby boomers.”
As for some pundits’ charges that millennials are putting off adulthood, Koblinger finds that highly unfair.
“Because of soaring student debt, low wages, higher rents and higher mortgages, many millennials have been forced to postpone things earlier generations took for granted — like going to grad school, buying a home or even getting married and having kids,” Kobliner says. “Yes, surveys show up to a record one-third of millennials are living in dorms or with their parents, but that’s because many are saving up for a down payment for a home. They’re not putting off adulthood – they’re making wise financial choices.”
The 2017 edition of Kobliner’s engaging, down-to-earth book Get a Financial Life, released this March by Simon & Schuster, offers a treasure trove of advice to help millennials keep making those solid choices. Called a “must-read” by reviewers and based on cutting-edge research, Get a Financial Life was originally published in 1996; for the new edition, Kobliner says, she has “re-reported, reexamined, and rewritten it from cover to cover.” She has also been able to investigate the results of her advice by talks with her first generation of readers. “It’s really gratifying to meet some readers who were in college when they read my book 20 years ago and have already saved a sizeable nest egg,” she says.
A few key take-aways
Here are just a few of the tips in Kobliner’s book that should resonate with millennials:
Get health insurance. “This should be your number one priority,” she says. “Even though you’re young and healthy, it only takes one accident to ruin you and your family financially.”
Pay off high-interest credit cards. As Kobliner explains in her book, “You usually can ‘earn’ more money by paying off a loan than you can by saving and investing. That’s because paying off a credit card or high-rate loan that has a 15% interest rate is equivalent to earning 15% on an investment – guaranteed – an extremely attractive rate of return.”
Start contributing to a tax-favored retirement savings plan. It may seem bizarre to start saving for retirement when that’s so far away, but the sooner you start, the sooner you can take advantage of the miracle of compounding interest. Kobliner gives an example of a 40-year-old who has more than $182,000 in retirement savings even though he has never made more than $40,000 a year – by simply putting away 15% of his salary each year in his employer’s 401 (k) plan. Although some personal finance authors say that saving $2,000 a year in an IRA or 401(k) will produce a nest egg of one million dollars by the time you retire, Kobliner says she prefers not to over-promise – “it depends how much money you put in and the return on your investments.”
Build an emergency financial cushion by making your savings automatic. Study after study shows that if people have savings automatically deducted from their paycheck, they are far more likely to save.. In addition, they automatically adjust their spending to match their new take-home pay.
Find the best student loan repayment plan for you. Ask whether you qualify for an income-based repayment plan. Ideally, avoid private student loans entirely in favor of federal student loans – their repayment plans are less restrictive (some private lenders, for example, will try to force you to pay in full if a co-signer dies). In addition, you may be able to have your loan balance forgiven after 10 years if you’re in a certain profession and commit a certain amount of time to working with the under-served.
And for the Elmo set…
Kobliner also advises parents on how to shape their children’s money habits and has even appeared on Sesame Street to give financial advice to Elmo (“the most fun I’ve ever had in my career”). As millennials start their own families, they may want to check out Kobliner’s other well-received book, Make Your Kid a Money Genius (Even If You’re Not!).